Jack London Square's future remains uncertain

REDEVELOPMENT

Robert Selna, Chronicle Staff Writer

Published
4:00 am PST, Monday, December 14, 2009

Ian Woolley, who works at a nearby insurance firm, walks past the new Jack London Square Market Hall on Friday Dec. 11, 2009 in Oakland, Calif. "They're doing all this development but there at no tenents," Woolley, who'd been working in the area for the past 2 years. less

Ian Woolley, who works at a nearby insurance firm, walks past the new Jack London Square Market Hall on Friday Dec. 11, 2009 in Oakland, Calif. "They're doing all this development but there at no tenents," ... more

Photo: Mike Kepka, The Chronicle

Photo: Mike Kepka, The Chronicle

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Ian Woolley, who works at a nearby insurance firm, walks past the new Jack London Square Market Hall on Friday Dec. 11, 2009 in Oakland, Calif. "They're doing all this development but there at no tenents," Woolley, who'd been working in the area for the past 2 years. less

Ian Woolley, who works at a nearby insurance firm, walks past the new Jack London Square Market Hall on Friday Dec. 11, 2009 in Oakland, Calif. "They're doing all this development but there at no tenents," ... more

Photo: Mike Kepka, The Chronicle

Jack London Square's future remains uncertain

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While the poor economy has slowed the ambitious redevelopment of Oakland's Jack London Square, questions remain about whether the waterfront district can become a regional food and entertainment mecca even in good times.

The premiere of Jack London Market, the project's 170,000-square-foot centerpiece, was originally scheduled for this spring. The opening was delayed, and now has been moved to mid-2010.

Developer Jim Ellis says that tenants have committed to or are negotiating leases for much of the new structure's first two floors, but another four stories of office space, available since March, so far have no takers.

Local real estate experts say there's a good chance that the offices, with views of the Oakland Estuary and San Francisco Bay, will fill up once the job market improves. But the area's draw as a culinary destination, with fish, meat, cheese, produce and other fresh foods and high-profile restaurateurs, confronts challenges that won't vanish when the economy improves.

Some observers say that Jack London Square may not be accessible enough to draw big crowds and does not have the worker and tourist foot traffic that has made places like San Francisco's Ferry Building successful. The fact that the area has had empty storefronts for some time doesn't help, they say.

The area got a potential boost last week when Oakland proposed three sites for a new baseball park - all near Jack London Square - as part of the city's bid to keep the Athletics from moving.

Type of tenants key

"The success of the project will really depend on the kinds of tenants they end up attracting," said Nina Gruen, a real estate and marketing consultant in San Francisco. "I would say it's a possibility that the project will succeed. I would not say that it's a probability."

The area sits at the foot of Oakland's Broadway, just south of the elevated Highway 880, and is about 10 blocks from the nearest BART station. Multiple freeway exits lead to the waterfront, but many offer less than direct paths.

In addition to the market structure, the development project so far includes a second new office building and a 1,000-car garage with retail space on the bottom floor. A future phase features another office building, retail and entertainment space, a 250-room hotel and more parking.

Ellis says the area has the right ingredients for success: a waterfront location in a town that has a shortage of retail space and a lot of new housing, including a growing population of gourmands.

Surge in restaurants

The East Bay's gourmet appetite, and Oakland's relatively cheap business costs and a spruced up downtown, have fueled a surge of high-end restaurant openings in recent years. But it's unclear how long that trend will last.

Business groups, the city and Ellis are working to improve access to the area by helping to sponsor a shuttle that will connect the square to downtown Oakland. They argue that proximity to the freeway is a bonus and note that the district has both a commuter ferry and an Amtrak station.

Discount leases

Ellis and his partner, Jim Falaschi of Transbay Holdings, are offering discounted leases and other incentives to snare the kinds of shops and restaurants they believe will attract a crowd with refined tastes. Fifteen restaurants, ranging from large to small, are planned for the area, and some have already opened.

In a parallel effort, the developers ended leases occupied by chain restaurants, such as T.G.I. Friday's, El Torito and the Old Spaghetti Factory, that once made the area feel less like the Ferry Building and more like Fisherman's Wharf.

"We were repositioning and marketing Jack London Square to a whole new tenant audience, the food-centric players," Ellis said. "In order for that message to resonate, we thought we had to demonstrate that we were serious about significantly changing the makeup of the project."

Mixed results

Efforts to fill space with the right blend of tenants have met with mixed results in the past year.

San Francisco restaurant pioneer Miss Pearl's Jam House opened in the old T.G.I. Friday's spot and an adjoining hotel was renovated by a boutique operator, but the economy has hammered the hospitality business and the receipts for both operators.

National book seller Barnes & Noble recently added to the square's vacancies when it decided it would close down its 33,000-square-foot store on Jan. 31.

Several successes include the restaurant Bocanova, which opened in a building adjacent to the market September. Bocanova has done well, according to owner Rick Hackett - about 350 diners on weekend nights and 100 during weeknights. The lunch crowd has been lighter, but steady, he said.

Hackett, who also owns MarketBar at the Ferry Building, says that while Jack London Square does not have the pedestrian access of the San Francisco waterfront, he gets repeat customers from cities as far east as Danville and Walnut Creek who like the area's abundant parking.

Potential for low rates

Restaurant business broker Mike Nova said he knew some potential tenants who weren't quite ready to take a chance on the area when times were good. But he now might recommend locking in low-rate leases.

"I could imagine people seeing the downturn as an opportunity to get good terms," Nova said. "There's still a big buzz about Oakland restaurants, and owners know the cost of doing business is cheaper."

Others say that Oakland's pull has disappeared now that rents have come down in San Francisco.

"Even with big incentives, if you own a restaurant in Oakland you still have to make a living and pay the bills," said restaurant consultant Mark Klein. "That's still a huge question mark in my mind."

Plans and costs of the project

-- 1 million square feet; six city blocks

-- Six new buildings; three already built, including a garage, and others renovated

-- 15 large and small restaurants

-- $375 million in development costs

-- Most of the property on a 66-year lease with the Port of Oakland

-- Developer pays approximately $850,000 annually

-- Port pays developer approximately $1.5 million to manage and maintain property